Supply Chains, especially global Supply Chains, are always facing a variety of potential risks. From natural disasters and transportation failures to political instability and cyber security, risk is a potential from many different directions.
While it’s likely that any global organization has dealt with incidents of localized disruption, a rolling, global pandemic is posing a whole new set of challenges. A worldwide predicament exposes all kinds of weak points in a supply chain that one normally wouldn’t consider. From straightforward problems like port closures, to less obvious problems like the unavailability of migrant labor to harvest crops, supply chains everywhere are experiencing shake ups.
We’ve reviewed input from several experts, and here are a few of the ideas we found to be helpful.
The first step to bringing resiliency to any organization during a time of uncertainty is to spend some time strategically analyzing the situation. First, determine critical issues. Likely lowering costs will be an issue for many if not most organizations during a time of intense disruption. Look at how transportation has impacted and how that will affect your Supply Chain. Perhaps labor shortages will be a critical issue. Every organization is different and every one will have different issues which are the most pressing.
Because cash reserves are going to be critically important, know how much is being spent on procurement. Scrutinize reports more often than you would in a more normal situation and consider changing approval rules and/or approval workflows to keep expenditures down.
Try to determine which of your suppliers are most at risk. It’s likely that many companies won’t be able to weather the storm. Try to determine which ones are most likely to have short-term liquidity issues.
Communicate with everyone – internal, external, upstream, downstream. This crisis really puts procurement and supply chain professionals at the center of many issues, so it’s important to be communicating with many people.
By communicating with your first and second-tier suppliers, you not only can know where your goods and materials are, you can also know what issues they themselves are facing. Perhaps a key supplier that your organization has an excellent relationship with is worried about surviving the crisis. If you know this, when a CFO potentially suggests delaying payments to suppliers in order to conserve cash reserves, you can advocate for this supplier and pass on the information that delaying payments to a particular supplier could have catastrophic consequences. Only by keeping communication channels open, can you make your inherent linchpin status invaluable to your organization.
Try not to be afraid to deliver news that you know will be upsetting. This is not the time for avoiding a problem and hoping it resolves itself. Be direct about what is really going on so that small setbacks don’t become major issues.
Another issue that might not be top-of-mind at the outset of major disaster is that shakeups can cause unexpected personnel shakeups down the road. People who are upset and people who have some extra time on their hands could consider other employment opportunities, and these could result in some job changes and even career changes once the crisis is over and all the dust settles. Make sure your most valuable human assets know that they are appreciated even when things are chaotic. People who feel valued and appreciated will likely feel less inclined to leave.
Resiliency is not just about adapting to new conditions, it’s also about recovering quickly when things return to normal. Did a buyer panic purchase a year’s worth of a critical item to be safe? Have an idea about what’s going to happen to those items when they’re delivered. If demand has slackened, think about how best to be prepared when it ramps up.
Hopefully, if buying has slowed to conserve resources and cash, you have people on your team who aren’t as busy with normal day-to-day activities and they will have the bandwidth to help with some strategic planning.
One of the main things to keep in mind during all of this is to ride the wave as best as possible and be flexible. Don’t let uncertainty paralyze you, and don’t insist on sticking to a plan created for a very different situation than the one you’re in. Being adaptable is a key component of resiliency, so don’t be afraid to take a new tack as the winds inevitably change.